Sin­ga­porean in­vestor plans ho­tel re­brand

Auck­land’s re­tail sec­tor is en­ter­ing a pe­riod of record con­struc­tion, while spend­ing by Welling­to­ni­ans rises mod­estly to sup­port the sec­tor. Marta Stee­man re­ports.

The Dominion Post - - Commercial Property - Chris Hutch­ing

Auck­land shop­pers will be spoilt for choice with the record ex­pan­sion of re­tail space over the next few years.

Col­liers In­ter­na­tional’s Mar­ket Snap­shot re­port said the 179,380 square me­tres of re­tail un­der con­struc­tion in Auck­land ‘‘is the largest it has been this cy­cle’’.

The 179,380sqm is 17.9 hectares and equates to al­most 40 times the area of Auck­land’s Aotea Square.

New ten­ants, in­clud­ing from over­seas, were be­ing at­tracted to Auck­land, Col­liers said.

Key re­tail de­vel­op­ments un­der way now in­clude the $790 mil­lion re­de­vel­op­ment of West­field New­mar­ket, the $233m ex­pan­sion of the Sylvia Park shop­ping cen­tre, and the $1 bil­lion Com­mer­cial Bay of­fice and re­tail de­vel­op­ment on the Auck­land water­front.

Col­liers said the in­crease in shops in Auck­land might see a po­ten­tial rise in va­can­cies, though there was long-term de­mand for new space. Many re­tail­ers would be faced with steady and mod­er­ate rental growth, it said.

Re­tail­ers would face com­pe­ti­tion and higher rents for space in new ma­jor re­tail cen­tres in Auck­land. How­ever, the re­port also showed re­tail va­can­cies rose in Queen St, Par­nell, Taka­puna, Otahuhu, in shop­ping strips and in shop­ping cen­tres over­all in the year to June 2018.

Queen St va­can­cies jumped to 4 per cent from less than 1 per cent, while Par­nell rose from just over 6 per cent to nearly 8 per cent.

They rose in New­mar­ket too, to near 6.5 per cent from 2 per cent, where many re­tail­ers have re­lo­cated be­cause of the re­de­vel­op­ment of West­field New­mar­ket.

Av­er­age re­tail face rents (rents in­clu­sive of build­ing costs) in prime ar­eas of the Auck­land CBD were static in the year to June 2018. They ranged from $1250 per sqm to $4300/sqm.

Last month real es­tate firm JLL re­searcher Daniel Long­mire said there had been a slow­down in the num­ber of lux­ury in­ter­na­tional brands will­ing to pay el­e­vated rents in cen­tral Auck­land.

Rents had been static dur­ing 2018, he said, as re­tail­ers had be­come cau­tious about overex­tend­ing them­selves in the face of ris­ing head­winds, Long­mire said.

Apart­ment dwellers and tourists would con­tinue to be the main driv­ers of spend­ing along Auck­land’s main re­tail and hos­pi­tal­ity strip on Queen St, he said.

Mean­while in Welling­ton, re­tail va­cancy rates in­creased on pre­mier shop­ping street Lambton Quay from about 3.5 per cent to 4.5 per cent in the year to June 2018, Col­liers’ re­port showed.

How­ever, re­tail rents on quay rose in spite of this.

Shop va­can­cies rose slightly in Welling­ton’s CBD to near 6 per cent and were steady at more than 9 per cent on Courte­nay Place, while they fell in Wil­lis St.

Over­all, Welling­ton cen­tral’s re­tail va­cancy rate climbed to 6.8 per cent, from just un­der 6 per cent, over the year.

Col­liers said Welling­to­ni­ans’ spend­ing had in­creased mod­estly and that sup­ported the re­tail sec­tor. New cen­tral shop­ping space would give ten­ants a va­ri­ety of op­tions and keep de­mand and sup­ply in bal­ance in the cap­i­tal.

Av­er­age Welling­ton gross face re­tail rents in the CBD rose slightly to $1318/sqm.

Ten­ants pay from $1110/sqm to $1500/sqm for prime re­tail space in the cap­i­tal’s CBD com­pared with $700/sqm to $1450/sqm in re­gional shop­ping cen­tres.

Col­liers said 10,500sqm of re­tail space was un­der con­struc­tion in Welling­ton. An­other 43,000sqm of re­tail projects was pro­posed.

Dur­ing the year the largest re­tail sale in the re­gion was the North City Shop­ping Cen­tre in Porirua. It was bought for $100m by Aus­tralian in­vestor An­gaet Hold­ings. the

ASin­ga­pore-based ho­tel in­vestor, Naumi Ho­tels, is about to set­tle the pur­chase of the Com­fort Ho­tel Welling­ton and ad­ja­cent Qual­ity Ho­tel Welling­ton on Cuba St in the cen­tral city.

The two ho­tels have 177 rooms, and Naumi will ren­o­vate and re­brand the prop­er­ties.

The prop­er­ties were sold by Rex Nicholls, hus­band of for­mer Welling­ton mayor Kerry Pren­der­gast, and Sage Se­cu­ri­ties, which is owned by Phil McGave­ston and four other share­hold­ers.

The price of the deal is con­fi­den­tial, but when Col­liers In­ter­na­tional’s na­tional direc­tor of ho­tels, Dean Humphries, was mar­ket­ing them last year the ask­ing price was about

$40 mil­lion.

Humphries said the ho­tels fit­ted within Naumi’s ex­pan­sion plans for New Zealand given their cen­tral lo­ca­tion in the cap­i­tal.

The ho­tels had their own char­ac­ter, de­sign and artis­tic flair and would be­come the ‘‘favoured ac­com­mo­da­tion provider for mil­len­ni­als, the en­ter­tain­ment and movie in­dus­try and young cor­po­rates’’.

The Com­fort Ho­tel is a her­itage build­ing with a de­tailed fa­cade built in 1916. Ren­o­va­tions for the 115-room Com­fort Ho­tel will be­gin af­ter March 2019 with ex­pected com­ple­tion at the end of that year, for re­brand­ing as Naumi Her­itage Welling­ton.

The Qual­ity Ho­tel ren­o­va­tions will also be com­pleted at about the same time, and be re­branded as Naumi Suites Welling­ton with 62 rooms.

De­sign firm Ma­te­rial Cre­ative is lead­ing the re­vamp, fol­low­ing its first ho­tel project de­sign­ing Naumi’s ini­tial ho­tel pur­chase in this coun­try, at Auck­land Air­port.

That ho­tel has won de­sign awards, and has been men­tioned in Forbes mag­a­zine as one of the best air­port ho­tels in the world.

The theme of the ho­tel re­fur­bish­ments in Welling­ton will be ‘‘ro­man­tic Ed­war­dian age meets lit­er­ary bo­hemian’’, ac­cord­ing to a Naumi state­ment – ‘‘a space that em­braces di­ver­sity and stead­fastly re­fuses to be bor­ing’’.

Gau­rang Jhun­jh­nuwala, chief ex­ec­u­tive of Naumi Ho­tels Aus­tralia and New Zealand, said the pur­chase was part of a strat­egy to gain a strong foothold in the New Zealand mar­ket.

Over the past year Welling­ton ho­tel and oc­cu­pancy de­clined by 1.5 per cent com­pared with the pre­vi­ous year.

Auck­land oc­cu­pancy was down 3.7 per cent for the year end­ing in Septem­ber 2018.

How­ever, tourist hot spot Queen­stown was higher by 2.6 per cent, while Christchurch ho­tels en­joyed a rise of 1.6 per cent.

There were 3.8 mil­lion in­ter­na­tional vis­i­tors in the year ended Au­gust 2018, up 3.6 per cent.

SUP­PLIED; DE­SCENT PHO­TOG­RA­PHY

Naumi Ho­tels is in­vest­ing in Welling­ton, hav­ing bought the city’s Com­fort Ho­tel, above, and ad­ja­cent Qual­ity Ho­tel. Rex Nicholls, in­set, was one of the ven­dors.

The Naumi Auck­land Air­port ho­tel has won de­sign awards, and has been men­tioned in Forbes as the one of the best air­port ho­tels in the world.

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